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Workers’ Compensation – Selected State Issues

Dan Sumner, Assistant DirectorDivision of Workers’ Compensation

Florida Department of Financial ServicesMarch 10, 2005

New Orleans, Louisiana

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Florida Undergoes Major Changes In Workers’ Compensation System

– July 1, 2002: Department of Labor and Employment Security abolished. Division of Workers’ Compensation transferred to Department of Insurance.

– January 1, 2003: Florida Department of Insurance part of new Department of Financial Services and Office of Insurance Regulation.• Division of Workers’ Compensation under DFS,

headed by Chief Financial Officer.

– SB 50-A – 2003 Workers’ Compensation Reform – Major Provisions Effective October 1, 2003.

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Florida’s Historical Rate Changes

NoFiling

NoFiling

31.20

-25.00

7.20

-10.60 -11.30

-2.10

1.50 2.50 2.70

12.90

-14.00

-5.10

NoFiling

NoFiling

-30

-20

-10

0

10

20

30

40

Sep-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Apr-03

Oct-03

Jan-05

Effective Date

Cu

mu

lati

ve R

ate

Ch

ang

e (%

)

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Cost Drivers

Attorney Involvement

Permanent Total/Indemnity Benefits

Medical Costs

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Changes to Attorney’s Fees

Eliminates provision that allowed for hourly fees; except for medical only cases. Maximum hourly fee is $1,500 @ $150 per hour.

Attorney retainer agreement cannot exceed statutory fees.

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Changes to Attorney’s Fees

Attorney fees paid by the carrier will be calculated only on the amount secured above those specified in the offer to settle. 20% of first $5,000, 15% of next 5,000. 10% of remaining amount to be provided during first 10 years after claim filed, 5% of benefits secured after 10 years.

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SB 50-A: Impact on Litigation

Petitions Filed, FY 2003/04– 127,548 (-15.42%)

Unrepresented Claimants: – Pre- Post

10/01/03 10/01/03 2.96% 2.78%

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Changes to Indemnity Benefits

Permanent Total– Eliminated Social Security eligibility

standard.– Established higher threshold to meet PT

eligibility: scheduled injury or not able to engage in at least sedentary employment within a 50 mile radius of employee’s residence, due to physical limitations.

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Changes to Indemnity Benefits

PT benefits end at age 75; exception for not having worked enough to be eligible for Social Security.

PT supplemental benefits end at age 62; exception for not being eligible for Social Security.

Annual increase in PT supplemental benefits is reduced from 5% to 3%.

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Changes to Indemnity Benefits

Permanent Impairment– Paid bi-weekly rather than weekly.– Increased from 50 percent to 75 percent of

the temporary total disability benefit amount.– Reduced by 50 percent for each week in which

the employee earned income equal to or in excess of the employee’s average weekly wage.

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Changes to Indemnity Benefits

Permanent partial impairment benefits for psychiatric impairment are limited to one percentage point in the permanent impairment rating.

Compensation for Death– Maximum funeral benefits increase from $5,000

to $7,500.

– Maximum death benefits increase from $100,000 to $150,000.

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Changes to Indemnity Benefits

The duration of permanent impairment benefits is as follows:– Two weeks for each percentage

point from 1 to 10 percent;– Three weeks for each percentage

point of impairment from 11 to 15 percent;

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Changes to Indemnity Benefits

– Four weeks for each percentage point of impairment from 16 to 20 percent;

– Six weeks for each percentage point of impairment from 21 percent or higher.

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Changes to Medical Benefits

Increases maximum reimbursement for physicians to 110% of Medicare.

Increases maximum reimbursement for surgical procedures to 140% of Medicare.

Hospital payments are reduced, except for emergency procedures.

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Changes to Medical Benefits Increases maximum number of

chiropractic treatments to 24 treatments within 12 weeks beyond initial chiropractic treatment.

IMEs are limited to one per accident, instead of one per specialty—cost borne by requesting party; if employee prevails, then carrier pays.

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SB 50A: Employer Compliance Out-of-state construction employer with

employees engaged in Florida must have FLORIDA on Section 3A of the policy, and use Florida rates, rules and forms.

Division Can Issue Stop Work Order for:– Failing to secure coverage.– Material misclassification.– Material underreporting or concealment of

payroll.– Failure to produce business records within 5

days of written request.

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SB 50A: Employer Compliance Definition of Independent Contractor

440.02(15)(c)3. “Employee” includes an independent contractor working or performing services in the construction industry.”

Exemptions – For Construction Industry:Corporate officers or members of a LLC owning

at least 10% of stock or membership of business can elect exemption. Only 3 exemptions per business and affiliated businesses.

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Electronic Reporting of Data

The Division is mandating electronic filing of the following reports:– Proof of Coverage, Medical Billing, First Report

of Injury (Late ’05).

Centralized Performance System developed to monitor and measure performance electronically.

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Electronic Reporting of Data

The Division is mandating electronic filing of the following reports:– Proof of Coverage, Medical Billing, First Report

of Injury (Late ’05).

Centralized Performance System developed to monitor and measure performance electronically.

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Proof of Coverage Database

On Division Websitewww.fldfs.com/wc

Platform for Policy Tracking System– Currently 3,531 registrants tracking

13,953 policies.

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Thank You